The Relationship between Organisation Structure and Management

Control In Hospitals:

The involvement of health care professionals, especially physicians, in management control of

hospitals has been recognised as central to hospital effectiveness (Young and Saltman, 1985;
Hillman et al., 1986). Unfortunately, the organisation structure of hospitals does not facilitate
management control and the participation of health care professionals. There is a historic dual
structure in hospitals — one, administrative in focus and based on bureaucratic control
principles, and the other a medical staff structure based on professional control principles (Smith,
1955). Both this structure and the lack of orientation of professionals to administrative goals tend
to work against elective management control (Abernethy and Stoelwinder, 1988).

Changes are creating pressure on the hospital's traditional !structure. Changes to hospital
funding such as DRG-based prospective payment in the USA (Fetter and Freeman, 1986) and
calls for greater accountability o1 clinical outcomes (Roper et al., 1988), require the integration
of physicians into the administrative structure of hospitals. Other changes are leading to greater
fragmentation of the administrative structure. One of the most noted changes is the increasing
professionalisation of nurses and allied health professionals (bloom et al., 1979). While these
staff have traditionally been part of the administrative structure, their professionalism will be
associated with demand for greater autonomy (Freidson, 1970). This may con0ict with the
development of an integrated system of management control (Fourcher and Howard, 1981).

The tensions between professional autonomy and bureaucratic control have long been
recognised in professional/bureaucratic conflict literature (Scott, 1966). Effective management
control in hospitals will need to find a rapprochement between professional and bureaucratic
control principles. To do this an understanding of the relationship between organisation structure
and the use of management controls is essential. One of the few frameworks available in which
to consider this relationship is Mintzberg’s (1979) professional bureaucracy model.

Mintzberg’s Professional Bureaucracy Model

Mintzberg (1979) developed a structural model of organisations based on previous research. He

considers structure as:

The sum total of the ways in which (an organization) divides its labour into distinct
tasks and then achieves co-ordination among them (Mintzberg, 1979, p. 2).
The co-ordination mechanisms which form part of Mintzberg's structural analysis are based on
earlier work by March and Simon (1958) and Galbraith (197(3) and include mutual adjustment
(the simple exchange of information between individuals in a non-hierarchical relationship), and
standardisation of work processes, work outputs and workers' skills. Group co-ordination (the
exchange of information in groups at either scheduled or unscheduled meetings), a sixth
mechanism, has been added by other researchers (Van de Ven et al., 1976). Although much of
the organisation behaviour literature uses the term co-ordination rather than control, co-
ordination involves control as much as co-ordination and can be considered “to be the same in
principle” (Mintzberg, 1979, quoting Litterer, 1965, p. 233).

With increasing size, the organisation divides labour so that:

We end up with an organization that consists of a core of operators, who do the

basic work of producing the products and services, and an administrative
component of managers and analysts, who take up some of the responsibility for co-
ordinating their work (Mintzberg, 1979, p. 19).